eth price has outperformed btc since the approval of the spot ETF on January 11, but on-chain data suggests the gap could widen further in the coming days.
ethereum price continues to consolidate its lead over bitcoin this week by closing above the $2,500 mark in each of the last 4 trading days since January 15.
Two vital trading indicators highlight how eth bulls could further assert their dominance in the coming days.
Investors have moved $1 billion worth of eth from exchange-hosted wallets into long-term storage
As ethereum price climbed the charts last week, there was widespread speculation that investors could book profits at the $2,500 territory milestone. But interestingly, at the time of writing on January 18, eth price has closed each of the last 3 trading days above $2,500, suggesting that the bulls are instead waiting for more. Profits.
Looking beyond the price charts, the recent change in eth exchange reserves better projects the bulls' stance. Cryptoquant's exchange reserves data provides a real-time snapshot of the total units of a cryptocurrency currently held in wallets hosted on exchanges and trading platforms.
As of January 11, investors held a total of 14.8 million eth coins in wallets hosted on the exchange. Interestingly, the figure has now dropped to 14.7 million eth as of January 18.
<img decoding="async" width="1024" height="587" src="https://crypto.news/app/uploads/2024/01/Screen-Shot-2024-01-18-at-10.04.36-AM-1024×587.png” alt=”ethereum (eth) Exchange Reserves vs. Price”/>
As shown above, investors have transferred 133,271 eth coins from exchange wallets to long-term storage in the last 7 days. long-term exchange-hosted wallets, allaying concerns about possible widespread profit-taking at the $2,500 milestone.
Typically, a drop in currency reserves is usually bullish for a cryptocurrency's short-term price action. Basically, it means that investors are moving their coins from trading wallets to long-term storage.
The preference for long-term storage during a price rally indicates investor confidence and their intention to wait for further profits. With exchange supply on the decline over the past week, it is not surprising that eth price has consolidated above the $2,500 support since January 15.
Importantly, historical trends show that periods of rapid decline in eth currency reserves have often been followed by an upward price trend. If the pattern repeats itself, ethereum holders can anticipate a rally towards $2,600 in the coming days.
As exchange supply falls, eth attracts more demand
Second, as ethereum exchange supply has declined over the past week, the total number of active eth sell orders has now fallen far below market demand. This current ethereum spot market dynamic is another vital on-chain indicator that points to eth widening its lead over btc in the coming days.
IntoTheBlock's aggregated exchange order book chart captures the total active buy/sell orders for a cryptocurrency across multiple exchanges.
Currently, there are active buy orders for 357,490 eth listed on 20 crypto exchanges, including Binance and Coinbase. Meanwhile, the bears have placed sell orders for only 250,750 eth.
The chart above shows that ethereum market supply has not caught up with demand at 106,740 eth. Intuitively, when demand for an asset exceeds supply by such a large margin, it indicates a dominant bullish sentiment within the ecosystem.
In short, the prolonged decline in eth currency reserves has now caused excess demand in the spot markets. These two vital short-term indicators could accelerate ethereum's price rally and further widen its lead over btc.
eth Price Forecast: $2,700 Could Be Next Target
Based on the 2 critical on-chain data points discussed above, it appears that ethereum price will remain on an upward trajectory towards $2,700 in the near term.
But for the bulls to validate this bullish forecast, they must first scale the $44,000 resistance level. IntoTheBlock In/Out of the money data, which groups current ethereum holders by their historical entry prices. also affirms this forecast.
It shows that 1.78 million existing investors had purchased 1.84 million eth at the maximum price of $2,612. If those holders look to sell as eth approaches its breakeven point, they could inadvertently trigger a reversal.
But if the bulls can break through the $2,612 sell wall, the $2,700 area could be the next target for ethereum price.
On the downside, if things take a bearish turn, bulls can rely on the historically significant $2,400 buy wall as initial support.
The chart above shows that 853,920 addresses purchased 4.5 million eth at an average price of $2,414. If those holders make frantic efforts to cover their positions, ethereum price may see an instant rebound from that territory.
